Minority business owners sometimes find securing funding from traditional financial institutions challenging, mostly due to a limited credit history. Because of this, online lenders may be the best option when it comes to small business loans for minorities.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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Nearly 20% of employer businesses are owned by minorities, yet gaining access to additional funding can often be a confusing process to work through. Minority entrepreneurs may ask themselves the following questions: Which financial institutions should they work with? What are the lending criteria in order to be approved for the funding that they seek? Are the lending institutions that they are reaching out to going to offer a positive experience? And finally, what are the best small business loans currently available for minority-owned businesses?
As an owner, you'll want to choose financial products and organizations that meet your current unique needs. Luckily, we’ve done the work for you and have found the best small business loans for minorities available today.
Our Top Picks for Small Business Loans For Minorities
How to Choose the Best Small Business Loan for Minorities
We used the following criteria to choose the best lenders for minority entrepreneurs:
Loan Features: We looked at the types of loan products available, including loan amounts and term lengths.
Application process: The length of the application, documents required, and whether or not a hard or soft pull on your credit were all things we looked at when choosing lenders.
Interest rates and fees: All loans come with an interest rate, but some lenders have higher fees than others.
Qualification process: To qualify for any loan product, lenders will look at your credit score, monthly income, and length in business.
Customer support: Customer support is always a consideration no matter the loan type. We chose lenders who are easy to contact via phone, email, and live chat.
Online user reviews: We turned to trustworthy sites like Trustpilot to look at user reviews from past customers.
Perks and Bonuses: Occasionally, loan products may offer perks and bonuses, such as payment flexibility, advertising transparency, and advanced technology.
Best Online Business Loans for Minorities
Working with online business lenders may offer more accessibility than with traditional banking partners. Online lenders may have unique loan products that serve very specific customer segments. Below are the top online business loans for minorities.
1. Biz2Credit - Best for Working Capital Loans
Biz2Credit is best for smaller-sized minority businesses who may need additional working capital to help keep their business afloat. Biz2Credit currently offers three different loan products - working capital loans, term loans, and commercial real estate (CRE) loans - all of which have high limits for borrowers. Minority business owners may also be impressed with the 72-hour turnaround time from application to funding.
Working capital loans are used to fund day-to-day operating expenses, including purchasing inventory, paying employees, paying for marketing expenses, and more. A working capital loan from Biz2Credit ranges from $25,000 to $2 million, with varying terms and repayment periods. To qualify for a working capital loan with Biz2Credit, you’ll need a minimum credit score of 575, a minimum annual revenue of $250,000, and to have been in business for at least six months.
The Bottom Line
Biz2Credit offers high borrowing limits and fast funding times. If you’ve been in business for at least six months and have a high annual revenue, Biz2Credit is a lender worth considering.
Bluevine specializes in small business lines of credit as opposed to small business loans. A line of credit operates similarly to a credit card - you get approved up to a certain amount, draw on the funds you need, pay them back, and can use them again. Lines of credit are ideal for businesses who may need extra funding available for a longer period of time.
Bluevine offers lines of credit from $5,000 to $250,000, with terms of six or 12 months from each draw. Rates start at 4.8%, and Bluevine does not charge any origination or prepayment fees. To qualify, you’ll need a minimum credit score of 625, a business history of at least six months, and $10,000 or more in monthly revenue.
The Bottom Line
Minority entrepreneurs in need of a straightforward loan product that they can use again and again should consider a line of credit from Bluevine. Low rates, excellent customer service, and fast funding times make this lender an attractive option.
3. Uncapped - Best for Established Ecommerce Businesses
While Uncapped doesn’t specialize in serving minority business owners, the lender offers transparent and flexible products that may be a good supplement to government-backed loans. However, Uncapped only lends to businesses with an online model, such as ecommerce, subscription, SaaS, or a mobile app.
Uncapped will lend between $10,000 and $10 million to businesses with at least six months of history and $10,000 in monthly revenue. There’s no minimum credit score requirement, but your business will need to follow an online model and process more than 40% of its transactions online. Other than a finance fee ranging from 2-12% of the loan amount, there are no additional costs or prepayment penalties. You can select a fixed-term loan with a three to 24 month term, or you can opt for the revenue-based model, which requires you to pay 5-25% of your monthly sales to Uncapped until the principal plus the fee is paid.
The Bottom Line
For established minority business owners with an online model that need a quick injection of cash, Uncapped is a great option. You can structure the loan to meet your needs and access some free resources, such as ACH payments, as well.
4. Kabbage - Best for Fair Monthly Income Requirements
Kabbage is backed by American Express and offers small business lines of credit to minority entrepreneurs. What separates Kabbage from other lenders are their lower-than-average monthly revenue requirements. If your small business isn’t yet making a huge profit, a line of credit from Kabbage could be for you.
Kabbage offers lines of credit ranging from $2,000 to $250,000. Terms are six, 12, or 18 months with payments made monthly. Fees are based on the term length you choose. For six-month loans, fees range from 2-9%, 12-month loan fees range from 7.5-18%, and 18-month loan fees range from 15.75-27%. To qualify, you need to be in business for at least 12 months and have a minimum credit score of 640. Monthly income requirements are much lower than competitors, starting at just $3,000 per month.
The Bottom Line
Kabbage is great for minority business owners who are in need of funds but do not have high monthly revenues. If you’ve been in business for at least a year and are looking to expand your business or cover operating expenses, a Kabbage line of credit could be for you.
5. Fora Financial - Best for Merchant Cash Advances
Minority businesses looking for flexible borrowing terms should consider Fora Financial. Fora Financial offers short-term loans and merchant cash advances with low credit score requirements and high borrowing amounts. With a merchant cash advance, you borrow money against your future credit card sales. Because of this, you aren’t bound to strict loan terms that come with other products.
Fora Financial offers short-term loans and merchant cash advances up to $750,000. For a short-term loan, terms range from four to 15 months. Fora Financial does charge an origination fee up to 2.5% of the loan amount, but the company also offers discounts for paying the loan off early. To qualify, you need a minimum credit score of 500 and to have been in business for at least six months. Revenue requirements are $5,000 per month in credit card sales for a merchant cash advance or $10,000 per month in revenue for a short-term loan.
The Bottom Line
Entrepreneurs looking for a cash advance product with flexible terms should consider Fora Financial. Fora Financial offers high borrowing limits, low credit score requirements, and early payoff discounts, making them an ideal option for minority business owners.
Main Features of The Best Alternative Business Loans for Minorities
Min. Credit Score
Min. Time in Business
Loan Amount (Maximum)
$3,000 per month
$12,000 per month or $5,000 per month in credit card transactions
U.S. Small Business Administration (SBA) Loans for Minorities
The SBA provides comprehensive and unique resources to help all small businesses succeed, and is focused on creating an ecosystem for the healthy development of minority-run businesses. Below are the following small business loans offered by the Small Business Administration:
SBA 7(a) - This program has the goal of funding small businesses up to a maximum of $350,000. A unique feature is the speed in processing and approval of applications.
SBA Community Advantage Loans - Established in 2011, the SBA Community Advantage Loan program has the goal of increasing underserved communities’ access to credit. The maximum loan amount is $350,000.
SBA Microloan Program - Lending intermediaries work with smaller businesses needing funding. The maximum loan via this program is $50,000. Borrowers are able to use the funds as needed, except for paying off debts or making real estate purchases.
HubZone Contract Program - This program is focused on providing up to 3% of Federal Contracts to underserved communities.
It’s important to note that the SBA partners with lending organizations that work with minority-run businesses at the local level.
Nonprofit Loans and Other Lending Programs
Minority business owners aren’t limited to seeking funding from traditional financial institutions. There are numerous local, national, non-profit, and for-profit organizations that support unique communities. These partners may offer resources that traditional lenders cannot provide.
Union Bank’s Business Diversity Lending - This organization provides a variety of loan and banking products. Qualified customers can receive up to $2.5 million in funding. Union Bank also provides Minority Business Certification assistance through its certification center, a key component to proving a business is minority-owned.
Accion - This organization focuses on providing inclusive financial services and partnerships. Accion helps small businesses around the globe via equity investments, business advising, and partnerships.
Kiva - Those looking for a crowdfunding platform to fund their business should explore Kiva. The organization provides comprehensive support for micro-entrepreneurs. Kiva has a global audience but also provides services for U.S.-based entrepreneurs. For individuals looking to donate and lend funds to entrepreneurs, Kiva borrowers have a 96% repayment rate.
Business Consortium Fund (BCF) - This fund is part of the National Minority Supplier Development Council. The fund has microloans available that range from $10,000-$75,000 for qualified businesses. Loaned money can only be used in ways that are predetermined by BCF.
Indian Loan Guarantee Program -This program is available to enrolled members of tribes in the United States. In addition to being an enrolled member of a tribe, the company seeking funds must be at least 51% minority-owned. The company must also be focused on elevating and uplifting Native American Communities through its services.
Community Development Financial Institution Loans(CDFI) - CDFI partners with financial institutions across the United States. Currently, there are a little over 1,000 member institutions. These organizations make lending decisions unique to the communities that each partner serves.
Accompany Capital - Immigrant and refugee entrepreneurs face an uphill battle in establishing credit. Accompany Capital helps these groups gain access to credit via microloans, lines of credit, and small business loans.
U.S. Department of Agriculture (USDA) Business and Industry Loan - This program partners with various financial institutions who then distribute loan funds to applicants who meet predetermined criteria. Applicants’ projects should be based in a rural location. The Business and Industry Loan is not specifically targeted toward minority business owners.
Small Business Grants and Additional Resources for Minorities
In addition to online small business loans and nonprofit loans, grants are also available to minority business owners. Grant programs are a wonderful way to find funding for specific areas of one’s business, and best of all, small business grants do not need to be paid back.
There are numerous national and local programs that have grant programs or offer professional services for free or at a minimal cost. These services help entrepreneurs gain access to mentorship, funding programs, and professional projects.
SBA 8(a) Business Development Program - For entrepreneurs looking to gain access to government contracts, the SBA 8 (a) program helps qualified businesses work for the Federal Government through Sole Source Contracts. This allows businesses to avoid going through the bidding process in order to be granted a Federal contract.
SCORE - SCORE connects entrepreneurs with mentors that provide business-focused support. SCORE mentors can be found across the U.S.
Small-business grants - Grant funding can be an attractive way to pay for specific components of a business. Small business grants can be found via the SBA, your local municipality, or your state.
Minority Business Development Agency (MBDA) - Starting a business is difficult. Dealing with expansion and the growth of a business is even more challenging. MBDA works with entrepreneurs during the expansion and growth seasons of their businesses.
First Nations Development Institute Grant - Grants issued by the First Nations Development Institute are specifically focused on the economic betterment of Native American communities. With that in mind, businesses that are focused on this initiative are the most likely to win grants issued by this agency.
National Minority Business Council -This non-profit organization helps to connect minority businesses with adjacent professional support. The National Minority Business Council also seeks to create a community ecosystem that provides business additional resources to its members.
For minority-owned businesses, there are numerous ways to access the resources needed to grow a business. For those looking for loans, professional support, or grant programs, it’s likely that there is a program that will fit your business needs.
There has been a growth of financial institutions aiming to meet the needs of historically underserved communities. Finding the right loan products as a minority business starts with research and ends with personal preference.
Frequently Asked Questions(FAQ)
What is a Minority-Owned Business?
In order to be designated a minority-owned business, a business must have a minimum of 51% ownership stake by a person or persons who are considered a member of a minority group. This would include African Americans, Asian Americans, Native Americans, and Hispanic Americans. Women and veterans are also often considered minority groups.
Why Do Minority Small-Business Owners Get Rejected for Loans?
Minority-owned businesses are much less likely to get approved for financing. And when they are approved, they receive lower amounts and higher interest rates. According to the Minority Business Development Agency, many minority business owners won’t even apply for a small business loan due to fear of being rejected. Common reasons for loan rejection include lower net worth, operating in a poor or rural area, and little to no credit history.
Technically, no. Minorities can apply for any business loan - whether that’s through a bank, credit union, or online lender. In order to be approved, it’s important you meet the minimum qualification requirements. So long as you meet those, you should be able to qualify for the loan whether you are a minority business owner or not.
Why Should You Look for Minority-Specific Loans?
Rather than looking for specific loans for minorities, it’s best to apply for lenders that you have a chance at qualifying with. This article, for example, allows you to quickly research lenders that may be willing to work with you. Oftentimes, minorities are looking for loans with less stringent credit qualifications and income requirements. Online small business lenders are often willing to work with those types of applicants, whether they’re a minority or not.
Who Qualifies for Minority Small Business Loans?
Minority-owned businesses are businesses where 51% or more of the firm is controlled by minorities, women, or veterans. In addition to meeting the minority-owned ownership threshold required by various government agencies, there are other requirements the borrower must meet. Businesses may be required to show their yearly revenue as determined by the lender. A minimum credit score and other details determined by the potential lender must also be met.
How Do You Apply for Business Loans for Minorities?
When applying for a loan with an online lender, you’ll fill out a preliminary application that takes just a few minutes. From there, you’ll be contacted by a representative from the company and asked for more details about your business. This may include a business plan, tax returns, income statements, and your business tax ID. You should get a lending decision within a few days, and funds are usually dispersed within hours to days of loan approval.
Which States Have The Most Minority-Owned Small Businesses?
According to MaxFilings, states with the most minority-owned small businesses include California (1.6 million), Texas (1.1 million), Florida (926,000), New York (708,000), and Georgia (371,000). States with the least minority-owned businesses are Vermont (2,300), North Dakota (3,100), Wyoming (4,000), South Dakota (4,000), and Maine (4,300). The top five states with the highest percentage of minority-owned small businesses include Hawaii (57.6%), Texas (42.3%), District of Columbia (41.1%), California (41%), and New Mexico (39.3%).